656. Deputy Paula Butterly asked the Tánaiste and Minister for Finance if he will consider amending the current income tax relief provisions for long-term leasing of agricultural land to permit leases between related parties to qualify for the relief; and if he will make a statement on the matter. [60005/26]

Section 664 of the Taxes Consolidation Act 1997 provides relief from income tax for certain income arising from long-term leasing of farmland. Subject to an upper limit, individuals who qualify for the relief are entitled to take a deduction in determining their total income for income tax purposes. To qualify, the lease must be a qualifying lease, that is, a lease of farmland which —

• is in writing or evidenced in writing,

• is for a definite term of 5 years or more, and

• is made on an arm’s length basis between one or more qualifying lessors and one or more qualifying lessees.

In respect of farmland which has been purchased by an individual pursuant to a contract entered into on or after 1 January 2024 for a consideration equal to the market value of the land at the date of the purchase, an individual must hold the farmland concerned for at least seven years before leasing the farmland under a qualifying lease. Where the land has been acquired otherwise than by purchase, this restriction may not apply.

Fundamental to this relief is that in order to qualify as a qualifying lessee, the lessee must not be connected with the lessor, or with any of the lessors if there is more than one. The rules for establishing whether or not persons are connected are laid down by section 10 of the Taxes Consolidation Act 1997 and provides that “a person shall be connected with an individual if that person is the individual’s husband, wife or civil partner, or is a relative, or the husband, wife or civil partner of a relative, of the individual or of the individual’s husband, wife or civil partner.”. A company may also be connected where it is under the control of the lessor or under the control of a person who is connected with the lessor.

The restriction on leases between connected persons is intended to prevent the misuse of the exemption. In addition, allowing relief in cases where the land was leased to connected persons could delay succession or lead to the fragmentation of holdings.

However, as with all such reliefs, my Department regularly considers the tax expenditure measures in place, and any resultant changes are dealt with in the context of the annual Budget and Finance Bill process.